Technocrats with latent statist tendencies have been peddling a new narrative regarding jobs creation in America: that automation and technology are systemically replacing human labor, and that this trend will cause substantial unemployment problems as technology advances.
This, I assume we are to presume, is a sea-change from the history of the last couple hundred years, which witnessed automation on a massive scale but which didn’t result in hordes of unemployed people. The Industrial Revolution is 250 years old, and in that time, the advance of technology has shifted worker populations dramatically. The percentage of the work force engaged in agriculture has dropped from 90%+ in the late 18th century to about 3% today, reflecting massive improvements in farm productivity. Virtually every job of the last couple hundred years has been displaced in some way by technology. Ice trucks no longer exist. Bowling alley pin-setting is now done by machines. Steno pools and typing pools have been replaced by word processors, photocopiers and printers. Telephone switchboard operators are a quaint movie relic. The ranks of letter carriers are shrinking, as electronic communication proliferates. Encyclopedia salesmen are a joke no one even understands any more. Yet, somehow, the ranks of the unemployed did not balloon upward.
Obviously, new jobs in new industries appeared to absorb all the workers displaced by technological advancement. Just as obviously, these appeared spontaneously, the product of free markets. Is it possible that the very nature of work and productivity changes enough with technology to cause a substantial deviation from this history? Is it conceivable that we’ll get to a point where no new industries that require human labor will come forth to absorb displaced workers? Certainly.
But, should we be wringing our hands over such a possibility and insist on statist/authoritarian solutions to a problem that doesn’t yet exist?
“Wait! It does!!” is what I expect to hear as a rebuttal to this question, and the decline in manufacturing jobs in America will be pointed at as proof. Correlation, however, is not causation, and I’m loath to concede this point even though a bunch of brainiac economists are making the case.
Why?
B
ecause I see far too little pointing of fingers at another inexorable trend that is burdening job creation: the expansion of the regulatory state. One estimate puts the negative impact of regulation on America’s economic growth at $4 TRILLION over the past three decades. While it is true that productivity and jobs are not the same thing (in some cases, productivity improves by eliminating jobs, and some jobs are not wealth-producing (e.g. compliance)), the regulatory state’s massive dampening effect on the economy kills income and wealth that would otherwise produce more income and wealth. Other studies support this conclusion, and that’s before even considering the dollar costs themselves (estimated to be $2T this year).
Obviously, the regulatory state cannot be disappeared. Not in a year, not in a presidential term, not in a decade or a century. But, it can be trimmed, curtailed, shrunk, reduced, folded, spindled, and mutilated. Given how burdensome it is, given how it has substantially outpaced economic growth, given that it is truly the elephant in the economic room, we would be far better served if all the economists’ hot air about technology making jobs disappear be instead about how big government is killing the economy.
As to the original premise, the notion that there is a paradigm shift underway and that disappearing jobs won’t be replaced by new types of jobs, the great peril is the false conflation of a potential problem with a default presumption that government intervention is the solution. Government didn’t solve the agrarian job losses, free markets did. Government won’t solve a problem of jobs lost to technology, either. In fact, government today is accelerating that problem with minimum wage mandates that are incentivizing service-sector automation e.g. touch-screen ordering instead of a high school kid saying “Welcome to McDonalds, how can I help you?” Minimum wage apologists argue that this is going to happen anyway, but they ignore the fact that it might not have happened for a few more years. This distortion will hamper the market’s ability to innovate out of job losses, and shove more people onto the unemployment ranks.
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